Net Book Value

Net book value is the amount at which an asset remains recorded on the books after accumulated depreciation, amortization, depletion, or impairment has been deducted from its original carrying basis.

It is an accounting measure, not a market price. That matters because an asset can have a net book value that differs sharply from its resale value or fair value.

Core Formula

For a depreciable fixed asset, the most common version is:

Why Net Book Value Matters

Net book value helps explain:

• how much of an asset’s recorded cost remains on the balance sheet
• how prior depreciation or amortization has reduced the carrying amount
• whether additional Impairment or a Write-Down may be needed

It is especially useful when analyzing fixed assets, intangible assets, and long-lived asset reporting.

Example

If machinery cost $100,000 and accumulated depreciation is $30,000, the net book value is $70,000.

Net Book Value vs Market Value

Net book value is an accounting measure based on recorded cost and accumulated reductions. Market value reflects what the asset could sell for now.

The two may be close, but they often are not. That gap is one reason companies must watch for impairment indicators.

Related Terms

• Depreciation
• Amortization
• Carrying Amount
• Write Down

FAQs